IMPORTANT POINTS
When an arbitration agreement chooses juridical seat of arbitration outside India and law of that place tom apply, Part I of the Act 1996 will have no application.
Choosing juridical seat of arbitration outside India attracts law of that place. There is no need to expressly exclude applicability of Act, 1996.

Headnote:(a) Arbitration and Conciliation Act, 1996 – Part I – Instantly, clause 28 of contract stipulating any dispute “is to be settled and referred to Arbitration in London” as also that English Law to apply – Thus English Law will apply to the conduct of the Arbitration – Consequently any objection to the conduct of the Arbitration or the Award will also be governed by English Law – Therefore challenge to the Award also must be in accordance with English Law – All these stipulations clearly and expressly exclude applicability of Part I – Clause 28 further stipulating appointment of an Umpire which is not provided in the Act – This must refer to section 21 of the English Arbitration Act, 1996 – Held, parties intended to exclude application of Part I of the Act. (Para 24, 26, 27, 29)
       (2015) 10 SCC 213 – Relied upon
       (2002) 4 SCC 105; (2015) 9 SCC 172 – Referred
       (b) Arbitration and Conciliation Act, 1996 – Section 34 – Parties choosing a juridical seat of Arbitration outside India and also a law other than Indian law as the governing law – Mere choosing of the juridical seat of Arbitration ipso jure attracts the law applicable to such location – It is not necessary to specify the applicable law – Instantly London chosen as juridical seat – Indian law stands excluded – Part I of the Act would not have any application – Award debtor not entitled to challenge the award u/s 34 before a court in India. (Para 32, 33)
       Facts of the case:
       Eitzen Bulk A/S of Denmark entered into the contract with Ashapura Minechem Limited of Mumbai as charterers for shipment of bauxite from India to China. The Charter party contains an Arbitration Clause.
       Disputes having arisen between the parties, the matter was referred to Arbitration by a sole Arbitrator. The Arbitration was held in London according to English Law. Ashapura Minechem was held liable and directed to pay a sum of 36,306,104 US$ together with compound interest at the rate of 3.75 % per annum. In addition they were directed to pay 74,135 US$ together with compound interest at the rate of 3.75% per annum and another sum of 90,233.66 Pounds together with compound interest at the rate of 2.5% per annum vide Award of the Sole Arbitrator dated 26.5.2009.
       Ashapura resorted to Section 34 of the Arbitration Act and filed objections in India in respect of the Award passed in London. The District Judge, Jamnagar dismissed the application for injunction seeking restraint on enforcement of the Award.
       From 14.7.2009 to 3.8.2009 Eitzen applied for enforcement of the Award in the countries of Netherlands, USA, Belgium, UK. The Courts in various jurisdictions have held the Award to be enforceable as a judgment of the Court.
       Gujarat High Court held that a Court in India has jurisdiction under Section 34 to decide objections raised in respect of a Foreign Award.
       Bombay High Court held that Part I is excluded from operation in case of a Foreign Award and thereupon directed enforcement of the Award.
       Finding of the Court:
       Judgment of the Gujarat High Court holding that Ashapura’s objections under Section 34 of the Arbitration Act are tenable before a Court in India that is the Court at Jam-Khambalia, Gujarat is contrary to law. The judgment of the Bombay High Court enforcing the Foreign Award under Part II of the Arbitration Act is correct and liable to be upheld.
       Result: Appeals filed by Eitzen Bulk A/S, allowed; appeals filed by Ashapura Minechem Ltd., dismissed.

JUDGMENT :

S.A. Bobde, J.

Leave granted in SLP (C) Nos. 2210-2212/2011, SLP (C) Nos. 3959/2012 and SLP (C) No. 7562-7563/2016.

2. The dispute in these appeals, arises out of the Contract of Affreightment dated 18.1.2008 (hereinafter referred as `the Contract’). Eitzen Bulk A/S of Denmark (hereinafter referred to as `Eitzen’) entered into the contract with Ashapura Minechem Limited of Mumbai (hereinafter referred to as `Ashapura’) as charterers for shipment of bauxite from India to China. The Charter party contains an Arbitration Clause as follows:-

“Clause No. 28

Any dispute arising under this C.O.A. is to be settled and referred to Arbitration in London. One Arbitrator to be employed by the Charterers and one by the Owners and in case they shall not agree then shall appoint an Umpire whose decision shall be final and binding, the Arbitrators and Umpire to be Commercial Shipping Men. English Law to apply. Notwithstanding anything to the contrary agreed in the C.O.A., all disputes where the amount involved is less then USD 50,000/- (fifty thousand) the Arbitration shall be conducted in accordance with the Small Claims Procedure of the L.M.A.A.” (emphasis supplied)

3. Disputes having arisen between the parties, the matter was referred to Arbitration by a sole Arbitrator. The Arbitration was held in London according to English Law. Ashapura Minechem was held liable and directed to pay a sum of 36,306,104 US$ together with compound interest at the rate of 3.75 % per annum. In addition they were directed to pay 74,135 US$ together with compound interest at the rate of 3.75% per annum and another sum of 90,233.66 Pounds together with compound interest at the rate of 2.5% per annum vide Award of the Sole Arbitrator dated 26.5.2009.

Proceedings in Gujarat

4. Before Arbitration had commenced, Ashapura filed a suit alongwith an application for injunction before the Civil Judge at Jam-khambalia, Gujarat praying inter-alia that the Contract and the Arbitration Clause contained therein was illegal, null and void, ab-initio. Though initially an interim injunction was granted, the learned Civil Judge dismissed the suit for want of jurisdiction vide order dated 12.1.2009. The appeal filed by Ashapura before the Gujarat High Court was dismissed as withdrawn on 2.7.2009.

5. In London, Mr. Tim Marshal, who was appointed as Arbitrator, held that Ashapura was in repudiatory breach and awarded Eitzen Bulk an amount of 36,306,104.00 $ plus interest, as stated above.

6. Having failed to stall the Arbitration and then having failed in the Arbitration proceedings, Ashapura resorted to Section 34 of the Arbitration Act and filed objections in India in respect of the Award passed in London. These proceedings were filed before the District Judge, Jamnagar for setting aside the Foreign Award made in London. A Misc. Civil Application No. 101/2009 for injunction restricting Eitzen Bulk from enforcing the Award in foreign jurisdictions outside India was also moved. The District Judge, Jamnagar on 24.8.2009 dismissed the application for injunction seeking restraint on enforcement of the Award.

7. From 14.7.2009 to 3.8.2009 Eitzen applied for enforcement of the Award in the countries of Netherlands, USA, Belgium, UK. The Courts in various jurisdictions have held the Award to be enforceable as a judgment of the Court.

8. On 14th July, 2009, the appellant filed proceedings in Netherlands Court seeking a declaration that the award dated 26th May, 2009 is enforceable as a judgment of the Court. The respondent appeared in the said proceedings and filed their objections. The Netherlands Court, however, declared that the award is enforceable as a judgment of the Court on 17th March, 2010.

9. On 24th July, 2009, the United States District Court for Southern State of New York declared the award dated 26th May, 2009 enforceable as a judgment of that court. The proceedings filed by the appellant were contested by the respondent.

10. On 27th July, 2009, the appellant filed present proce

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2016 Supreme(SC) 380

Cases Referred (3)